The URL can be used to link to this page

Home My WebLink AboutAudit presentationTown of Westlake Council Meeting February 22, 2016 Overview •Introduction •Audit Process •Required Communications •Audit Results •Areas of Strength and Accomplishment •Financial Highlights •New Accounting Pronouncements •Questions 2 3 Introductions The Firm of Texas #4 Largest Tarrant County Accounting Firms | Fort Worth Business Press #8 Largest North Texas Accounting Firms | Dallas Business Journal #7 Largest Austin Accounting Firms | Austin Business Journal #14 Largest Houston-Area Public Accounting Firms | Houston Business Journal #5 Largest San Antonio Accounting Firms | San Antonio Business Journal 2014 Top 50 Firms | INSIDE Public Accounting 2014 BEST of the BEST Firm | INSIDE Public Accounting Weaver is the largest independent accounting firm in Texas and the Southwest. We are consistently named a top firm in the state and nationally. 4 5 Engagement Leadership Jerry Gaither Partner, Assurance Services John DeBurro Senior Manager, Assurance Services 6 Engagement Team Town of Westlake John DeBurro, CPA Audit Senior Manager Alyssa Grant Audit Associate II Tom Winson, CPA Advisory Services -ACL Data Specialist Consulting Jerry Gaither, CPA Public Sector Leader Audit 7 Audit Process Engagement Timeline 8 Initial Audit Planning Interim Fieldwork July 27 –July 31 Final Fieldwork Jan 4 –Jan 15 Release Audit Opinion Feb 15 Council Meeting Feb 22 Discuss Developments/ Issues Continuous Communication Audit Process •The audit was performed in accordance with Generally Accepted Auditing Standards (GAAS) and Generally Accepted Government Auditing Standards (GAGAS) •The audit process was a risk-based approach in which we identified potential areas of risk that could lead to material misstatement of the financial statements. We tailored our audit programs and resources to specifically address the following areas of risk: •Revenue recognition and related receivables •Capital projects, purchasing and compliance with bidding procedures •Payables, accrued liabilities, and expenditures 9 Audit Process •Walkthrough of accounting controls over significant transaction cycles: •Budget •Purchasing and Accounts Payable •Payroll •Cash Receipts –taxes, municipal court, utility billing •Test of internal controls: •Cash disbursements •Payroll •Test of compliance •Public Funds Investment Act •Bidding procedures 10 Interim fieldwork and risk assessment were performed in September 2015. Procedures included: Audit Process •Testing of significant account balances using a combination of vouching of material transactions, sampling transactions and applying analytical procedures. •Assisting with the preparation of the financial statements. 11 Final fieldwork-performed in January 2016 Procedures included: 12 Auditor Communications for the year ended September 30. 2015 13 Required Communications to Those in Charge of Governance Communication Results Auditor’s responsibility under generally accepted auditing standards (GAAS) The financial statements are the responsibility of the Town. Our audit was designed in accordance with GAAS in the U.S. and provide for reasonable rather than absolute assurance that the financial statements are free of material misstatement. Our responsibility is to express an opinion about whether the financial statements prepared by management with your oversight are fairly presented , in all material respects, in conformity with U.S. generally accepted accounting principles. Our audit of the financial statements does not relieve you or management of your responsibilities. The audit of the fiscal year 2015 financial statements has been completed and we have issued an unmodified opinion. 14 Required Communications to Those in Charge of Governance Communication Results Auditor’s Responsibility under Government Auditing Standards In addition to the GAAS responsibilities, we are required to issue a written report on our consideration of internal controls and identify significant deficiencies, including material weaknesses, if any. Our report does not provide assurance on internal controls. We design our audit to provide reasonable assurance of detecting material misstatements resulting from noncompliance with provisions of contracts or grant agreements that have a direct or material effect on the financial statements. We have issued a written report on the results of these procedures; however, our report does not express an opinion on compliance. No findings noted. 15 Required Communications to Those in Charge of Governance Communication Results Unusual transactions and the adoption of new accounting principles The significant accounting policies used by the Town are described in Note 1 to the basic financial statements. New GASB pronouncements implemented in 2015 include GASB Statement No. 68,“Accounting and Financial Reporting for Pensions” and GASB Statement No. 71, “Pension Transition for Contributions Made Subsequent to the Measurement Date”. As a result, the Town reports it’s net pension liability, deferred inflows and outflows of resources, and pension expense associated with the Texas Municipal Retirement System and the Teacher Retirement System. Accordingly, the beginning net position of the Town’s governmental activities and business-type activities have been decreased by $530,877 and $38,720, respectively, to reflect the cumulative effect of the change in accounting principle. We noted no transactions entered into by the Town during the year for which there is a lack of authoritative guidance or consensus. 16 Required Communications to Those in Charge of Governance Communication Results Fraud and illegal acts No fraud, irregularities, or illegal acts were noted. Material weakness in internal control No material weaknesses noted. Other information contained in documents containing audited financial statements We performed limited procedures on the Management’s Discussion and Analysis (MD&A) and Required Supplementary Information (RSI). We did not provide any assurance on this information. Management judgments and accounting estimates Management’s estimates of state foundation revenue, uncollectible receivables, net pension liability, and useful lives of capital assets were evaluated and determined to be reasonable in relation to the financial statements as a whole. Management representations We requested certain representations from management that were included in the management representation letter. 17 Required Communications to Those in Charge of Governance Communication Results Difficulties encountered No significant difficulties were encountered during our audit. Management consultations We are not aware of management consulting with other accountants for a second opinion. Auditor independence No independence issues noted. 18 Required Communications to Those in Charge of Governance Communication Results Audit adjustments Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. During the current year, we have passed on an audit adjustment of $30,794 related to questioned costs identified by Texas Education Agency in the administration of IDEA-B Formula grant funds. No material adjustments have been posted as a result of our audit. Other material written communications between Weaver and Tidwell, L.L.P., and the Town Nothing to note. 19 Auditor Results Auditor Results •We have issued the Independent Auditor’s Report on the financial statements –Unmodified opinion •We have issued the Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards –No findings noted. 20 Areas of Strength and Accomplishments •Management knowledgeable in municipal finance •Full cooperation of Town staff •No material weaknesses in internal controls 21 22 Financial Highlights 23 Financial Highlights Comparison of Governmental Funds Expenditures by Fund (in millions of dollars) $5.2 $7.1 $2.1 $1.1 $8.8 $0.7 FY 2014 General Fund Westlake Academy Debt Service Fund Capital Projects Funds Westlake Academy Expansion Nonmajor Governmental Funds Governmental Funds Expenditures for FY 2015 totaled $21.9 million, a $3.1 million or 12% decrease •Capital outlay decreased $4.7 million from FY14. •Education costs increased $0.8 million, primarily due to $0.5m increase in Instruction expenditures. $6.6 $7.9 $2.0 $1.2 $0.5 $2.8 $0.9 FY 2015 General Fund Westlake Academy Debt Service Fund Capital Projects Funds Westlake Academy Expansion Solana PID Capital Projects Nonmajor Governmental Funds 24 Financial Highlights Comparison of Governmental Funds Expenditures $- $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 $9.0 $10.0 2015 2014 25 Financial Highlights Comparison of Governmental Revenues by Source Governmental Revenues for FY 2015 totaled $37.7 million, a $20.0 million or 120% increase. Increase is primarily attributable to a $18.1 million contribution of net proceeds in the Solana PID Capital Projects Fund. 13.0% 3.7% 5.0% 16.4% 49.8% 3.2%8.8% FY 2015 Revenues Sales taxes Property taxes Other taxes State program revenue Contributions Building permits and fees Other 28.1% 8.4% 9.9%31.7% 0.6% 7.2% 14.2% FY 2014 Revenues Sales taxes Property taxes Other taxes State program revenue Contributions Building permits and fees Other revenues 26 Financial Highlights Comparison of Governmental Revenues by Source (2 -year comparison –current year and prior year –in millions) $- $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 $16.0 $18.0 $20.0 Sales taxes Property taxes Other taxes State program revenue Contributions Building permits and fees Other 2015 2014 27 Financial Highlights Fund Balances Governmental Funds’ Fund Balances As of September 30, 2015, the Town’s governmental funds reported a combined ending fund balance of $28.2 million as follows: •General Fund $7,680,550 •Westlake Academy 1,673,712 •Debt Service 20,916 •Capital Projects 2,144,984 •WA Expansion 395,753 •Solana PID 15,173,051 •Other Funds 1,096,515 $28,185,481 Overall, fund balance of the Governmental Funds increased by $16.3 million, primarily the result of a $15.2 million increase in the Solana PID Capital Projects Fund which was established during this fiscal year. General Fund fund balance decreased by $272,968 during the year ended September 30, 2015. The ending balance, $7,680,550, represents 117% of fiscal year 2015 General Fund expenditures. 27.3% 5.9% 0.1% 7.6%1.4% 53.8% 3.9%General Fund Westlake Academy Debt Service Capital Projects WA Expansion Solana PID Capital Project Other Funds 28 Financial Highlights Budgetary Highlights –General Fund The Town had a favorable budget variance of $234K (net change in fund balance): •Actual revenues were $279K less than budgeted. •Building permits and fees were $361K less than budgeted. •Contributions were $158K less than budgeted. •Franchise fees were $154K more than budgeted. •Actual expenditures were below budget by $1.1m. 29 Financial Highlights Comparison of Proprietary Funds Operating Revenue and Expenses –FY 2015 and FY 2014 (in millions) $- $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 $4.0 $4.5 Operating Revenues Operating Expenses 2015 2014 Proprietary funds net position decreased by $1.6m during fiscal year 2015, primarily the result of a $1.1m increase in operating expenses over fiscal year 2014; as well as $323K of net transfers out compared to $43K in transfers out in the previous year, primarily due to an interfund payment included in this year’s transfers. 30 Financial Highlights Proprietary Funds Operating Expenses-(in thousands) The increase in operating expenses is primarily the result of: •$1.0m increase in professional and contract services, primarily attributed to a $1.0m payment to City of Ft. Worth for the Town’s proportionate share of water system upgrades. $- $200 $400 $600 $800 $1,000 $1,200 $1,400 Payroll costs Professional services Depreciation Amortization of WW Rights Water Purchases Other 2015 2014 31 Standards Required to be Implemented in FY2016 Effective for the year ended September 30, 2016 GASB 72 –Fair Value Measurement •Objective: to improve accounting and financial reporting by state and local governmental entities related to fair value measurements. •Effect: GASB 72 will require the Town to review its current methods for measuring assets and liabilities that are subject to fair value reporting. GASB 76 –The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments •Objective: to identify the hierarchy of generally accepted accounting principles (GAAP). •Effect: GASB 76 will not have a significant effect on the Town’s financial reporting. 32 We appreciate the opportunity to work with Town of Westlake and look forward to our continued relationship. Questions? Jerry Gaither, CPA, CGFM | Engagement Partner 972.448.6918| jerry.gaither@weaver.com John DeBurro, CPA | Senior Manager 972.448.6970 | john.deburro@weaver.com